The November issue of The 25% Cash Machine won't be out until later this week, so I wanted to shoot out this alert to recommend that you buy unit shares of KCP Income Fund (KCPIF) using limit orders only -- as is required by almost every brokerage firm. The stock is trading at $8.25 (U.S.) today, carrying a monthly dividend yield of 11.27%.
Take a full 3% position in KCP Income Fund (KCPIF), which means that if you have $100,000 to invest, put $3,000 into KCPIF units. I used to recommend a 4% position, but since I'm planning to expand the portfolio to 30 holdings (from the current 25), 3% is an appropriate amount to invest if you own the rest of our model-portfolio holdings.
In some cases (like Schwab account owners) you will have to call this trade in. For other online brokerages (like TD Ameritrade) you can simply put in the symbol KCPIF, along with your limit price, and you will fill easily. It varies from firm to firm.
With a few thousand subscribers getting this alert, I expect the share price to move up a bit due to the buying pressure from us, so keep checking on the price as you work your orders through your broker.
Third-quarter earnings are due out Wednesday, Nov. 1, and I want to own the stock before KCPIF announces its results. I believe they will be quite good and thus deserve the timing of this buy alert.
KCP will hold a conference call at 8:30 a.m. on Nov. 2, 2006, to discuss financial results for the third quarter.
Current Price: $8.20
52-week range: $7.86 -- $10.13
Target Price: $12
Dividend Yield: 11.34%
Dividend Payout (Annual): 93 cents
Payout Frequency: Monthly
Ex-Dividend Date: est. Oct. 27
Dividend Payment Date: Nov. 29
Market Cap: $407 million
KCP Income Fund (KCPIF or KCP.UN on the Toronto Exchange) is an open-ended mutual fund trust that operates 19 manufacturing facilities and four Kem Krest Distribution Centers with over 4,000 employees -- all done through its operating subsidiary KIK Custom Products.
KCP is one of North America's largest custom manufacturers of consumer products in laundry, household cleaners, OTC medications, pharmaceutical and health, and beauty care -- all for both brand name and retailer brands.
Along with other value-added outsourcing services, KCP produces brand-name consumer products for a wide range of well-known, leading, international consumer products companies, including Gillette, Johnson & Johnson, L'Oreal, Procter & Gamble, Unilever, Dial, Colgate-Palmolive, SC Johnson, Pfizer and 3M.
KCP produces retailer-branded products for leading retailers like Albertsons, Kroger, Loblaws, Safeway, Target, Wal-Mart, Walgreens and foodservice leader Sysco.
I'll provide more information on the KCP Income Fund in the November newsletter later this week, but please go ahead and buy this name before the earnings release Wednesday. I expect that management will provide a robust outlook and, if it does so, I expect the stock to trade higher, making this timely buy worth our while.
It's all about forward guidance friends.
See You Friday with the Weekly Update
Bryan Perry
Editor The 25% Cash Machine